Doctor gets 60 months in prison for billing scheme

Phil Ray

The attorney for an Altoona anesthesiologist involved in a complex scheme to bill insurance companies for bogus prescriptions said in a federal court filing this week that his client was an “excellent physician” but a “terrible businessman.”

His finances were a “tangled, messy web,” according to attorney Benedict P. Kuehne of Miami in a sentencing memorandum presented to a U.S. district judge in

Florida on behalf of Dr. John H. Johnson.

Johnson owned six pain clinics in Pennsylvania and Maryland as well as other businesses, and according to the sentencing document, “The crimes he committed were part of a misguided motive to keep his businesses afloat.”

Johnson was among 16 suspects arrested last September in the U.S. District of Southern Florida.

He entered guilty pleas to federal counts of mail fraud and wire fraud during a hearing in February.

On Monday, he appeared before U.S. District Judge Daniel T.K. Hurley and was sentenced to 60 months in prison followed by three years’ supervised release.

The judge ordered Johnson to pay more than $15 million in restitution to the insurance companies who paid out large sums of money as reimbursement for specifically designed medications.

The recommendation was that Johnson serve his time at the federal prison in Lewisburg and that he undergo 500 hours of drug and alcohol rehabilitation.

The sentencing memorandum presented by his attorney indicated Johnson was an alcoholic who has finally acknowledged his addiction and has sought treatment.

He is to be taken into custody at the U.S. Courthouse in Johnstown on June 30 to begin his sentence.

The government alleged he became part of a group that prescribed compounded pain creams or medications designed for specific patients “unable to be treated with commercially available, FDA-approved medication.”

In a stipulation of facts presented to the judge during his guilty plea, it was indicated that Johnson was solicited through a friend to prescribe the compounded pain creams for the patients in his clinics.

“Johnson began prescribing the compounded pain cream to some of his patients without proper analysis of medical necessity, and he ordered the doctors in his pain management clinics to prescribe the compounded pain creams whenever possible,” the government contended.

He was aware that his payments for issuing the bogus prescriptions, paid through a company called Clinical Corp., was based on the number of prescriptions he wrote.

“Defendant Johnson wrote hundreds of prescriptions for compounded creams without proper medical necessity,” it was charged.

The government contended the entire scheme brought in more than $170 million in insurance payments and the government indicated that the amount of restitution being requested was just over $130 million.

Johnson’s $15 million restitution order was based on the proceeds received for the prescriptions he wrote for a company called NuMedCare LLC, which was set up by co-conspirators “as a base of operations for the fraud and money laundering activities.”

The co-conspirators purchased failing pharmacies — RX of Boca Raton, Fla., and American Custom Compounding Pharmacy of Dallas — to manufacture the large quantities of the creams “in order to deceive and defraud the insurance providers, and contrary to accepted medical practice,” the government stated.

While the financial benefits to many of the co-conspirators were great, the sentencing memorandum presented by the defense attorney indicated Johnson was not aware of the large scope of the fraud and contended he received only $150,000 in actual payments.

The defense was asking that Johnson be sentenced to 37-46 months in prison, but the judge imposed the maximum 60-month sentence. Johnson grew up in a Missouri farming community and excelled in academics, his memorandum stated.

“Whether on the farm or his chosen profession, Johnson has always been a tireless and dedicated worker,” his attorney proclaimed.

His clinics provided ongoing care to more than 3,000 patients.

As the result of his conviction, he will be required to surrender his license to practice medicine, his attorney said. He already has surrendered his Drug Enforcement Admini­stration credentials that authorized him to prescribe medicines.

Johnson employs more than 100 people at his businesses, and he was given time to find jobs for the employees and new providers for his 3,000 patients.

The doctor also faces charges in the U.S. District Court in Johnstown for

failure to submit payroll taxes.

“The parties anticipate a resolution of that case (due to be tried in September) without a trial,” the defense submitted.